Canoe Company's manufacturing accounting system uses direct labor costs to apply overhead to goods in process and finished goods
1 answer:
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Answer: 4,000 scans
Explanation:
Scanner A:
Total revenue = Volume × Revenue per scan
= 5,000 x 1,500
= $7,500,000
Profit = Total revenue - Total Variable cost - Total fixed cost
Total Variable cost = Total revenue - Total fixed cost - Profit
= $7,500,000 - 1,000,000 - 500,000
= $6,000,000
= $1,200
Scanner B:
Total revenue = Volume × Revenue per scan
= 5,000 x 1,500
= $7,500,000
Profit = Total revenue - Total Variable cost - Total fixed cost
Total Variable cost = Total revenue - Total fixed cost - Profit
= $7,500,000 - 800,000 - 450,000
= $6,250,000
= $1,250
Let X be the number of scans where total profits of the two scanners are same.
Profit from scanner A = Total revenue - Total Variable cost - Total fixed cost
= 1,500 × X - 1,200 × X - 1,000,000
= 1,500X - 1,200X - 1,000,000
= 300X - 1,000,000
Profit from scanner B = Total revenue - Total Variable cost - Total fixed cost
= 1,500 × X - 1,250 × X - 800,000
= 1,500X - 1,250X - 800,000
= 250X - 800,000
Therefore,
300X - 1,000,0000 = 250X - 800,000
50X = 200,000
X = 4,000
Hence when 4,000 scans are done, total profits of the two scanners would be same.